Set Yourself Free (Interview Video with Yap Ming Hui)

Recently I was given a chance to sit down and have an interview with Mr. Yap Ming Hui, the Malaysia’s #1 authority on “Money Optimization” to talk about his latest book called “Set Yourself Free”. In total he has written six bestseller books.

CONTEST: Win yourself a copy of Set Yourself FreeSet Yourself Free is the latest book authored by Yap Ming Hui. It is really easy to participate, just click “like” button and post a comment below this post. Tell us what’s the most important factor to achieve financial freedom. I’ve convinced Yap Ming Hui to giveaway three copies of his new book to three lucky winners. Winner will be contacted through email.

Here is the first part of the interview:

Here is the second part of the interview:

So here is the condensed content from the interview.

Freedom is something that is more valuable than money or anything else. This is why when Mr. Yap’s new book is entitled “Set Yourself Free,” it is beyond money and everything.

This is what Mr. Yap told me in the interview session:

In my opinion, you will truly “Set Yourself Free” when you don’t have to manage your finance. This can be achieved by hiring an independent financial advisor to help you manage it. Perks of doing this are that you do not have to spend time checking your account, investment, insurance and your will. Your independent financial advisor can manage all these things. That’s how you can set yourself free as well.

I had discovered, there is no book in the market about independent financial advisor. This are among the reason why I want to write this book, in the hope that more people will become aware of what an “Independent Financial Advisor” means, what are the criteria for you to define an Independent Financial Advisor, how you can select the right financial advisor and what financial advisor can and cannot do for you.

Based on my research, I had found most people do not know how to fully utilise their money in their pursuit of wealth. Most of the time they are inexperienced on deciding which step they should or should not take. This is why I had create a diagram called Money Matrix chart that explains steps a person need to focus on to be financially free and successful. Area of focus is divided into two. First area focuses on money making, which everyone aware that we need capital to create more capital. This area focus on ways to make more income, generate more active income from business or from wherever it is that you are doing. At the same time, we must not forget also to optimize our money.

Optimizing our money concerns on how we turn our income into savings, how we turn the savings into investment, how we protect those investments or assets and how we do proper insurance planning. For example a person that has a low ability of generating income will have a very low money optimization capability. The person will end up being poor.

In this context, poor refers to a situation where a person need to continue working and cannot get out of debt. While people with a medium level ability of generating income are those who work enough but still has low money optimization capability. A person with a high income, maybe 10,000 – 20,000 per month, but choose to spend a lot of money on maintaining a lifestyle and things like that, they will still end up being a Middle Class. So, Middle Class means, as I said, again they’ve got to continue working. If they stop working, the income will then stop.

When a person moneymaking ability is high, as you can see up there, and then the person may be rich, which means this people may make an income at 50,000 – 100,000 a month. So, they’ve got very high income. Again, if they don’t really make the effort to convert their own income into saving and investments, they may not accumulate much success. That’s why I say they are rich but not wealthy.

On the right-handed side of the chart, shows a situation where a person that has a low monthly income ability, low money-making capability, but have a high money optimization capability, which means that the person even though earning less income/low income, but try to save, try to maintain his daily expense level, as KC always refer to do, that person will end being in a Self-Sufficient position.

If the person’s moneymaking capability is moderate but have a high money optimization capability (more in saving, more in investing) eventually reach a position, which are called Financially Free. Financially Free, meaning that you are not wealthy, but the asset that you accumulate will be enough to maintain your living expenses and your lifestyle. At the time when you leave this work, maybe when you’re 80-years-old, and things like that. That’s why I say you are not Wealthy, you are just Financially Free.

The most desirable position that most of us aim for, is to become Wealthy. This can be achieved when you have high moneymaking ability, and you are very good in converting that income into assets and you build those assets, not like most of our clients. The income – just the passive income generated from the asset is enough to take care of your living expenses, and for that matter, you will never touch your assets.

Therefore, your assets will continue to be there even after you are dead thus making your next generation able to become wealthy as well. The idea of Money Matrix is that you are able to know your current financial state (where you stand) and what are the necessary actions to become Wealthy.

I do not agree with Robert T. Kiyosaki in one of his books, ‘Why We Want You to be Richer’ that he co-authored with Donald Trump, when he said if middle class don’t decide to become rich, it turns out that you become poor. I believe that the middle class, if they don’t become rich, they can still aim to become Financially Free.
Another reason on why I do not agree with Kiyosaki is that if people from middle-class background were trying to become rich without preparing themselves with sufficient knowledge about investments and on how to set up a business, they are likely to be unsuccessful and may end up dumping to Poor.

This is what I have seen, they rush into business, quit their job, they don’t have income, and they have a lot of stress. Then when they want to go back to the job market, they are outdated already; they can’t find a good job at their age, so they end up becoming poor.

That’s why I want to suggest an alternative way on how to become Wealthy for the middle-class. First, what I would suggest now for the middle-class for them is to aim to increase their Money Optimizations skill to become Financially Free. This will be less risky because when you optimize your money, you are just optimizing whatever you have already got now. When you’re money making, you’re trying to chase all the money and you don’t have it yet; and you don’t know where your money will come from also.

Money Optimization is to optimize whatever you already have. You need to see the amount of cash you have and think how do you optimize the return? Properties that you have – how do you optimize it, whether you should stay away or change to another investment? When your trust fund is not performing – what do you do? These are all the things you can do to optimize so that you can increase your savings. Then, you can achieve Financial Freedom.

Once you achieve Financial Freedom, you can secure your financials, security for your family, then you want to be take risks now, increase your moneymaking capability, and take more risks if you succeed. Along the way there are a few more chances for you to succeed. Here, number one.

Secondly, even if you fail you won’t fall back to Poor because you’ve already done some protections to your asset using trust structure, from saving the money aside for your wife and children. Therefore, I feel that this is a much safer way, much more certain way to become Wealthy. I’ve seen quite a number of my clients using that approach during my practice.

Most of middle class are middle age that work as a business owners or professionals, income range between 10,000 to 50,000. This amount refers to family income (husband and wife combined per month). They are highly educated and have sent their children abroad to study or they have intention to send their children to study abroad. These people may enjoy a comfortable lifestyle, but they may not have saved much. All of what they have saved may not be enough to sustain them if they choose to stop working. This is what I think is middle-class.

Some financial advisors only able to manage certain part of their client’s finance, this will lead to several problems. I think that when someone does something like this, they have two main problems: Number one is that the person does not have a holistic picture. When a person talk to their life insurance agent, the insurance agent of course, work to achieve recommend him to buy as much coverage as possible, which would be more and more premium. When the person talks to maybe a unit trust agent, unit trust will say maybe buy more and more unit trust. At the end of the day, clients do not know where to put his money optimally, whether to insure himself, invest in unit trust, or he should put more money into real estate. That is the number one problem. There is no holistic picture for the person’s investment when you do it separately like that.

Number two is that when you deal with a financial advisor like this, most of the time, either tied to one bank, tied to one insurance company or unit trust company, a lot of times, you may not get the best or great financial product.

Say for example, you want buy a China fund. You happen to talk to one unit trust agent that represents the Company A. Then, the unit trust agent from the Company A recommends you to the China fund, the best China fund under Company A. But, if there’s a China fund in Company B, or C, or D which is even better than Company A, the agent or the financial from Company A cannot advice you that. That is why that when you deal with a separate or tied type of financial advisor, you are not going to get the best deal. The same thing happens to your insurance.

So, you want to buy, let’s say a life insurance. We all know that the insurance industry is quite competitive. Every now and then, one company will launch new package to compete with another package. If you’re dealing with a company, which is tied to one company, chances are that may not be the most competitive lie insurance plan that you have in terms of premium, in terms benefits, and the coverage that they offered.

The other choice is to go through an IFA, which is the Independent Financial Advisor who is not tied to any company. If you use an IFA, (IFA they are not attached to any company) you can go ahead and choose the best product for you.

After they got a product for you, when you receive all the statements from a unit trust company, or insurance company, or whatever investment you do, the IFA will be able to consolidate and compare all these investments for you to monitor. It will be an easier task for you to compare all these investments: Fund A, Fund B, or Fund C, apple to apple.

For example Fund A is 5%, Fund B bring 7%, Fund C bring -5%. You will know very clearly which one performs better, which one performs less. The IFA can recommend you to say if this Fund C is performing poorly, maybe you can say to the fund manager, change this portfolio.

If you have been sold the Fund C, if you bought the fund from one – maybe it’s from a unit trust company – it’s very unlikely that the financial advisor would ask you to sell off the old fund; because if you sell the old fund and buy from Company B, it will reduce their income. So, they are unlikely to do so compared

If the financial advisor were to take care of your pocket, it will be at the expense of his own pocket. If he were to take care of his own pocket, then he may not be good for you because he may not give you the objective advice. In the end, there’s no way to win, for both ways to win.

In the IFA situation, you can generate income through any of the unit trust fund company. Eventually you win. Your fund will perform better. You are happy. So, both parties is happy.

In my opinion DIY finances does not work. For example, we open 24 hours a day. The first box you can see there are the 24 hours work that we have. If you put 90% of making money, we’ve got barely little time, 10% left on Money Optimization. So, you won’t be able to optimize your money well.

If you were to put more time to say A: “Hey, I don’t want to engage an IFA, I want to do it myself.” Then, you put 50% of your time to optimize your money. But, you are doing it at the expense of your moneymaking time. For some people, I think that, that box is these guys will say, “I want to spend even more time to learn how to invest, to learn how to do the wheel, how to compare the insurance plan.” Then, we are spending 90%, and only 10% effort on the moneymaking. This, to me, I think is quite ridiculous because money optimization.

It is something that you can delegate to a professional, in this profession they are licensed by the Security Commission and Bank Negara. They can do their own job for you. Whereby, moneymaking is something that only you can do yourself using your own strength, your own genius. You cannot delegate to someone else to drive it for you. That’s why I will say don’t plan your finances on your own. Delegate to someone else so you can focus more energy, more effort on making more money. I think that is more ideal in our situation now.

Based on chart 5, ninety percent of effort should be put on moneymaking, then 10% effort on money optimization. The 10% is a 100% contributed by an Independent Financial Advisor. When you leverage an Independent Financial Advisor of course, the Independent Financial will answer that, “We – true blue honor – will be able to make sure that all your financial planning, retirement planning, insurance planning has been all done. Even though you’re spending 10% of your effort only, you enjoy the 10% like a 100% of effort being done by yourself.

I think the best part is you get to spend 90% of maximum of the time to make more money. You can actually become wealthy with less effort. Of course, some people say, “Yeah, I explained I have money to make more money.” Again, the time that you save, you can then pursue your other interest like KC Lau, or maybe doing guitar, do some songs, or things like that – have a more balanced life. Why do you want to stay up all night for comparing insurance policies and comparing unit trust? There are better things to do in life.

I created a 3D box of an IFA because I’m trying to find a way to communicate how extensive is the work or the capability of an IFA. Let’s start it on the top there: 5 Key Roles of an IFA. You can see there are 5 key roles here. Number one is that IFA can play a role as a Gatekeeper. Like in our case, a lot of clients they want to increase wealth. They will receive a lot of proposals from banks, from a unit trust agent, and insurance agent. So, what we do is that we act as a gatekeeper to help them to filter, which one is useful for them, not useful for them, so they can save their time.

Number two is that, the IFA also act as a Coordinator to coordinate. Say, for example, some of the clients are owner of a trust. So, they’ve got no time to contact the trustee, look at trust deed, and look at the legal opinions there. They rely on someone like us to coordinate with the trustee, do some of part of paperwork to minimize the work for the client.

Number three is Information Organizer. There are a lot of people who are not so good in organizing their financial information. So, IFA will help you. They have all the information about you – the will, the trust, your funds, your offshore funds, or unit funds, of properties, and your TT. Also, you can rely on them to organize all of this information and update for you so that you can access what you need at your fingertips.

The fourth is being the client’s the Coach. The consumer normally has some current investments on a certain day. I have got a client who likes to talk about investments. Whenever talking about investment, everything goes to his benefactor. We talk about will, we’ve got trust, the insurance on his life, you know, mostly PNL. As a coach, we can tell the client, you can also do what you like to do and know other parts. As a coaches we will coach the client to pay attention on other areas which is less exciting but also important.

The fifth is Financial Freedom Navigator. Why? It’s something to say that is related to the Roadmap to Financial Freedom I referred to before in the last book. When we want to achieve financial freedom we want to achieve/ have a comfortable retirement. Return on investment on our investment is not the only factor. When we retire is also a factor. How much we will save now is also a factor. What kind of lifestyle and how much we’re going to spend when we retire? How much we will spend on our insurance industry education is also a factor. There are so many factors that can make or break one from just the freedom, for success, or more.

IFA can play a role to guide you and say how you manage all these factors for you to successfully achieve your financial freedom. So, that is the five key roles. Next, you can see on the left-hand side: The 8 Areas of Personal Finance. There we can see, to really optimize your money, what I mentioned just now, you could then just go to Number 2, Investment Planning. This is the part, I believe we need to spend more energy, spend a lot of time because it’s more exciting; but there are another seven areas that a lot of people overlook.

Risk Management and Insurance Planning – to protect your income, to protect your family even in your death or other unfortunate events;

Investment Planning

Education Planning – to ensure education funding for children;

Retirement Planning – for your own self;

Asset Protection – to find a way to protect the asset you have to protect against calamities, against fires, or disaster.

Estate Planning – will and trust. This one, I believe, that people don’t normally talk about it because people don’t like to talk about being dead and things like that.

Debt and Loan Management – managing of interest or loan payment.

Tax Planning.

To optimize your money, you need to focus not only on Investment Planning. A lot of people focus only on Investment Planning, which is very wrong; we cover all the eight areas. I’m glad that you can see that you share in your books these top financial tips, which cover all areas, I believe.

Another dimension is: 6 Holistic Money Optimization Steps. This is the international, proven, or certified steps for you to really optimize your money.

Analyze All the Data to see whether you have a gap when you’re planning for your retirement or you’re planning for children education.

Develop a Plan or what certain things you need to do. Maybe you need to increase the investment return, maybe you could actually find more property investment. Maybe you need to cover yourself with some insurance.

Implementation. Get all these things done included in your plan.

Monitoring – last but not the least, is whatever it is that you do implement, due to the fact that the world is changing a lot, it’s very unlikely for you to get the plan done according to your ideal execution. So, there’s a lot of surprise, a lot of changes needed to be done along the way. Therefore, you need to monitor the plan and you do it. Then go back to step number one in the next year.

These three, as you can see, one I have spent maybe the last ten minutes explaining these, all the elaborate function and the job of an Independent Financial Advisor. Imagine if you’re to do the Money Optimization well, you can do all these jobs yourself. If you pass it to an IFA, if an IFA got a proper system, proper experience and knowledge, they can do it in a very efficient and in a very simplest manner. That’s why I say I feel there is an urge for me to write a book hopefully explaining what IFA is all about.

Whether you decide to engage an IFA or not, that’s another matter. I’ll leave it up to you. But, I think it’s safe that for all those others and maybe the followers of KC Lau’s blog, they will know what IFA can do. I think that’s only fair.

15 Comments

I think the most important factor is to stop procrastinating. We all come across or have great ideas on how accumulate wealth but we just keep talking about these ideas and never get around to doing it. So for eg many will agree with Mr Yap’s suggestion to appoint an IFA, but how many will actually get around to appointing one?

KC, very insightful and thanks for sharing. The statement to set free is achievable with one open to learning, and having some discipline. Your website / blog have been my mentor and using the tips have tremendously helped me. Further reading of this article adds to my bank for execution. Thanks!!

I am learning and gaining in the process and sharing in the process. If I cannot do much, I hope the little I can part if a gift. Thanks KC for providing the service sincerely and genuinely, that makes a whole world of difference to me.
Yes, will join the webinar series as the current format do not allow download, hopefully the new set will allow. May God Bless You

After reading on Mr Yap’s post…. i realise, i might just need an IFA after all….
I always thinks doing financial planning all by myself, is better because i improve my financial knowledge, but at the same time, i waste time..

I hope I can get this useful book to advise my current financial condition, and how i can improve it. Thanks to KC regarding this book, and also the guidance/advice all these while.

It is definitely the book i will read for this year because, really, there is none in the local market that talks about the roles an IFA can play and how IFA can contribute in helping their clients to come out with a road map to, first, strengthen their financial position then towards financial freedom as the ultimate goal.

However, IFA is like a general practitioner in the medical profession. He may be a specialist with in dept knowledge in one or two areas of financial ailments. He is not Mr Know-all. Different financial ailments need different financial prescriptions to suit different individuals’ MONEY HABITS. The fact that IFAs are not financially free themselves shows that it is a very complex journey. Then, how can he confidently guide others to financial freedom? The day we achieve financial freedom is the day we develop an income generating asset (or some call it money making machine) which can replace the current one, i.e. ourselves, so that we are FREE to do things we enjoy doing without concern about money. Therefore, is there any IFA out there who are in that category, other than Mr Yap and Mr KC Lau?

Thanks KC for all the sharing on financial freedom. Honestly, i have subscribed to Mr Yap’s advise to optimise our money. I have already initiated such a plan that’s why when i heard & read of Mr Yap’s money optimisation tips, i was so excited & happy!
Good luck & may all enjoy the path to financial freedom!!